Structural Heterogeneity and Poor Microenterprises in Argentina
Marta Bekerman and Cecilia Rikap
Management capacity ( ...continuation )

On the other hand, suitable administrative management of these enterprises requires a registry of income and expenditures with the greatst detail possible. In this regard, 60% of the entrepreneurs record their income from sales in writing. However, these percentages diminish in regards to records of direct costs (53%) and particularly of indirect costs (28%). This situation signifies that companies in this sector do not have bookkeeping to record their cash inflow, cash outflow and other assets.

These results are consistent with the outcomes of another study produced from a previous survey of borrowers of a civil association that grants microcredits. A clear underestimation of indirect costs was observed, as in the case of mechanical wear on the machinery and tools used during production; this can result in the decumulation of fixed capital and, in turn, to the point of not having sufficient money to replace it when needed (Bekerman, 2009: 528). The course of the business is valued by the amounts in the “cash box” week to week (or even on a daily basis).

These matters reveal some of the main problems that businesses in the informal sector face, in addition to the absence of strategies for promoting and commercializing products and the little to null knowledge about their main competition. At the same time, they also do not develop useful business plans to facilitate business management and regular follow-up of the business (Bekerman, 2009: 526).


Upon analyzing the responses of the enterpreneurs interviewed in regards to current public policy, the first result that merits mentioning is a marked ignorance of existing policies and the ways in which they can affect their businesses and their lives. A mere 16% declared knowledge of a government policy that either helps or hinders them. Within these scanty responses, inflation is one of the issues that negatively affects them. 86% of those interviewed responded to the second question what should the government do to improve your situation? providing a broad range of answers from which three central themes emerge: credit, a departure from the informal sector and training.

In regards to access to credit, the microenterprises request that the State either address this need directly or support non-profit institutions so that they can increase their available funds. The most frequently mentioned need for credit is the acquisition of machinery and tools (28%), followed by credits for purchasing, renting or repairing the premises of the microenterprise (19%), for purchasing additional merchandise (16%), for housing and raw materials (14%) and finally, for beginning a new business (9%). The amounts requested range from small amounts up to $20,000 and are associated to the purpose of the credit.

In terms of the legalization of their enterprises, those interviewed point to the existence of many obstacles. They emphasize the cost and complexity of complying with existing regulations when they attempt to exit the informal sector. They especially mentioned difficulties related to getting an operating license and registry as small contributors (Monotributo) in order to issue invoices and circulate freely to sell their products. It is important to mention that the majority of borrowers were unaware of the existence of the simplified singletax scheme for small contributors (Monotributo Social).

It is interesting to note that more than half of the microenterpreneurs (60%) consider that their business performance would improve if they were to receive training and/or technical assistance. Among those who wish to receive training, 45% named technical aspects of production, 33% wish to learn about accounting, 30% mentioned sales and 37% specified administrative matters. On the other hand, 17% of those interviewed who have machinery and tools consider that they need training in their use and 15% in questions of maintenance or repair.

A second group of less frequent answers is tied to market development: having set locations or stalls at fairs, finding cooperative ways to commercialize products and promoting exports. Furthermore, other topics arose regarding the quality of life: control of inflation, more employment opportunities, the situation in the neighborhood (streets, access, security) and housing improvements, whether through donations or credit.